Editorial: Business leads rugby into brave new world

5:29 AM Saturday Nov 17, 2012

The ownership model for the Crusaders and Hurricanes may not be ideal for the rugby union. Photo / Wairarapa Times-Age

The New Zealand Rugby Union could only hope for the best when it called for expressions of interest in four of the country's five Super 15 rugby franchises. Several factors suggested that, as commercial propositions go, this would be a far from easy sell. Twelve months on, however, it has cause for satisfaction.

The ownership model at the Hurricanes and the Crusaders for the next three years may not be ideal for the rugby union. Nor have investors been found for the Chiefs or the Blues. Nonetheless, it is clear a significant remodelling of the financially struggling domestic game has begun.

The licence to manage the Hurricanes has been awarded to a consortium led by the Wellington Rugby Union. Welnix, a group of Wellington businessmen who own the Phoenix, has taken a minority shareholding. In the case of the Crusaders, agreement in principle has been reached so a regional consortium can take over the franchise.

The final licence agreement is expected to be signed within a month. The Hurricanes outcome underlines both the attractiveness and the obstacles inherent in the rugby union's offer.

The union retains full ownership of franchises, and remains responsible for contracting players and coaches. It continues to call most of the shots. The licensees will have to try to recoup their money through marketing and commercial deals. They will have the power to select players, but all this will have to be done working in tandem with the game's governors.

In many instances, these restrictions have clearly deterred the union's prime target - wealthy private investors who would inject fresh energy and ideas, and outside capital, into the game. Instead, those most interested in holding a licence have been provincial unions with the financial wherewithal.

Lack of such wherewithal ruled the Waikato Rugby Union out of the Chiefs. An initial expression of interest foundered, and the rugby union has sought to make progress by appointing a new, commercially focused board.

Private investment in professional sport is often more about vanity than commercial gain. There is more than a hint of that in the Hurrricanes investment. Welnix talks of synergies between the Hurricanes and the Phoenix, but they go only so far.

It has indicated it will happily bathe in any reflected glory from its enhancing of sport in the Wellington region. But Welnix will also be keen to maximise its merchandising opportunities, and this could prompt it to demand a greater on-field say.

Gareth Morgan's group has surely noted the effect of the arrival of Alessandro Del Piero at Sydney FC. Interest in the club and its activities has skyrocketed. That suggests there is likely to be pressure for an increasing number of big overseas names to appear on the rosters of the partly privatised Super 15 franchises.

Options are still being considered for the Blues regionally and internationally, the rugby union says, and more time is required to consolidate a final bid. That can hardly come soon enough. If any franchise requires fresh thinking and stronger boardroom governance, it is the Blues. And if any market should be attractive to private investors, it is Auckland. The rugby union's ambitions will not be achieved until the Blues are part of its brave new world.